Estate Planning Business Succession
Despite the pandemic, two out of three American adults still do not have a will. Procrastination and thinking they don’t have enough assets to warrant a will are the top reasons given, says the article “The Biggest Mistakes People Make in Their Wills, According to Estate Lawyers” from Huff Post. Estate planning lawyers know this is a tragic mistake, since everyone over age 18 needs some estate planning documents. They can spare family members considerable financial and emotional stress during a terrible time.
Here are the biggest mistakes seen by estate planning attorneys:
Assigning co-executors. One executor and an alternate executor are all you need. If you make all of your children executors, the chances they will all agree are unlikely. Selling a house is the best example. What if one child wants to keep the house and two want to sell? What if they do not agree on the price?
If the parents insist on naming all of the children executors, then one solution is to have everyone sign waivers to agree in advance how disputes will be settled.
Thinking all you need is a will to avoid probate. A valid will has to go through probate and, depending on where you live, be administered by the court to some degree. However, if your estate includes assets titled solely in your name, without a beneficiary designation, they will go through probate before being distributed according to directions in the will. Talk with an estate planning attorney about how trusts work, how to title assets and other strategies to minimize probate.
Not being clear about personal possessions. Simple language of leaving “an equal share” to your heirs makes conflict inevitable. When loved ones die, emotional attachments to possessions become powerful. Siblings who always got along may find themselves battling over items they never seemed to care about in the past. The more discussions you can have with children before passing, and the more details in the will, the less likely the disputes will grow into litigation. If one of your children wants the family silver, write it in the will.
Failing to update wills and estate plans. Certain life events seem obvious times to update a will and estate plan, like the birth of a new child or grandchild, divorce, marriage or relocating. However, even without these “trigger” events, an estate plan needs to be reviewed and revised every three to five years. If you have children and grandchildren, for instance, and one of the children dies, the grandchildren will not inherit anything, unless provisions are made in the will.
Will an inheritance be helpful or harmful? Leaving a large amount of wealth to a young adult can be destructive, even if it is legal. An outright gift to a college student could disqualify them from financial aid. A large gift to a family member contemplating divorce could end up in the bank account of the ex-spouse. Think carefully about the short and long-term impact of the inheritance.
Keeping your will and estate planning documents a secret. Make sure people know where to find these documents and keep them in a safe place. If wills are not found, it is as if they do not exist.
Trying to do it yourself or with someone who is not an experienced estate planning attorney. If the will is found invalid by the court, it is as if you do not have a will and state law will determine what happens to your property. Even the best intentions from an attorney who practices in another area of the law puts your estate and your family at risk. Estate planning is complicated, and mistakes quickly become expensive for heirs.
Reference: Huff Post (March 8, 2022) “The Biggest Mistakes People Make in Their Wills, According to Estate Lawyers”
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